Federal Authorities Charge Four in $4 Million Nvidia AI Chip Smuggling Operation to China

Four Indicted In Alleged Conspiracy To Smuggle Supercomputers and Nvidia Chips to China

US authorities allege four people based in Florida, Alabama, and California conspired to illegally ship supercomputers and hundreds of Nvidia GPUs to China as recently as July. The charges, which were unsealed in federal court on Wednesday, are part of a wider government effort to crack down on the smuggling of advanced AI chips to China. Over the past few years, the US has introduced a series of export control rules designed to prevent Chinese organizations from acquiring computer chips that have become popular for developing AI chatbots. The restrictions aim to slow China in what US officials have described as a race to develop powerful AI systems, including surveillance tools and autonomous weapons. Some Chinese companies have been forced to make do with older or less capable chips, but others have allegedly turned to smugglers. The new indictment alleges that Hon Ning Ho, Brian Curtis Raymond, Cham Li, and Jing Chen worked together to buy Nvidia chips through a sham real estate company in Florida and then resold them to Chinese companies. The hardware was allegedly shipped to China using doctored customs paperwork by way of Thailand and Malaysia, two countries that US regulators have identified as hot spots for chip smuggling. Prosecutors allege that the defendants exported about 400 Nvidia A100 GPUs and attempted to smuggle about 50 of Nvidia's newer chips, known as the H200. The defendants are also accused of trying to export about 10 Hewlett Packard Enterprise supercomputers containing Nvidia H100 chips. Two undisclosed Chinese companies allegedly paid the defendants nearly $3.9 million in total for their efforts, according to the indictment, which was first reported by Court Watch. "This is an extremely serious offense. At the time these were being exported, these were Nvidia's most advanced chips," federal prosecutor Noah Stern told magistrate judge Kandis Westmore in an Oakland, California courtroom on Thursday. Stern explained that the semiconductors could be used by the Chinese government in military, surveillance, disinformation, and cybersecurity applications. Stern said that authorities arrested the four defendants on Wednesday. He said that Ho, whom he described as the ringleader, is now in custody along with Chen and Li. Raymond, who ran a company reselling Nvidia chips, is not being detained, Stern said. Amy Filjones, a spokesperson for the US attorney's office in Tampa, Florida, said Raymond has been released on bond.

Feds charge four with illegally smuggling Nvidia AI chips to China

Federal prosecutors have charged four people with illegally smuggling Nvidia GPUs and HP supercomputers with Nvidia GPUs from the US to China, according to a court filing spotted by Court Watch. The US government has placed restrictions that prevent Nvidia from selling its most powerful chips for AI training to China, but Chinese companies like DeepSeek have still created competitive AI models. After DeepSeek released its R1 model earlier this year, Scale CEO Alexander Wang said he thinks China has far more of Nvidia's H100 AI chips than people may think, despite the export controls, and operations like this may help explain how. Nvidia, which reported quarterly earnings of a record $57 billion in revenue on Wednesday. According to the documents, only one person has been arrested so far, while the four are facing charges including smuggling, conspiracy, and money laundering. The four people charged -- Mathew Ho, Brian Curtis Raymond, Tony Li, and Harry Chen -- allegedly conspired to export the GPUs starting in late 2023, including shipping 50 of Nvidia's coveted H200 GPUs, and several batches of the earlier H100 GPUs without a license. The filing explains that one part of the scheme was an alleged front company called Janford Realtor, LLC: Despite its name, Janford Realtor, LLC was never involved in any real estate transactions. Instead, the company served as an intermediary for several unlawful and unlicensed exports to the People's Republic of China ("PRC") of advanced and highly-controlled U.S.-origin Graphics Processing Units ("GPUs") with artificial intelligence ("AI") and supercomputing applications. Ho, a US citizen, was the registered agent of the company, and Li, a Chinese national, was identified as a manager of the company. Bryan Curtis Raymond of Huntsville, Alabama, is listed in the filing as the CEO and sole owner of "U.S. Company 1," which was paid nearly $2 million by Janford Realtor. On his LinkedIn, Raymond says he is the CEO of Bitworks, which he describes as an AI infrastructure company that "provides sales and support for Nvidia and AMD solutions," and in another post said he was recently hired as CTO for another AI cloud computing company, Corvex. Ho and the other co-conspirators bought GPUs from vendors, including Raymond and his company, using money sent via wire transfer from bank accounts in China, while using fake shipping letters and contracts to evade export controls. "The export system is rigorous and comprehensive," Nvidia spokesperson John Rizzo says in a statement to The Verge. "Even small sales of older generation products on the secondary market are subject to strict scrutiny and review. Trying to cobble together datacenters from smuggled products is a nonstarter, both technically and economically. Datacenters are massive and complex systems, making any smuggling extremely difficult and risky, and we do not provide any support or repairs for restricted products."

Feds charge 4 in plot to export restricted Nvidia chips to China, Hong Kong

Four men have been indicted on federal criminal charges related to a plot to export Nvidia chips worth millions of dollars to China and Hong Kong in violation of tight U.S. restrictions, court documents show. One of the defendants, Brian Curtis Raymond, a 46-year-old resident of Huntsville, Alabama, was identified last week as the chief technology officer of an artificial intelligence cloud company in Virginia that announced plans for a merger that would allow its stock to be publicly traded. That company is not implicated in the case, and told CNBC that his job offer has been rescinded. Raymond and the other three defendants, all of whom were born in China or Hong Kong, are charged with conspiracy to violate the Export Control Reform Act of 2018 in connection with the export and attempted export of the Nvidia chips to end users in China and Hong Kong, after first shipping the chips to Malaysia and Thailand. The defendants had not obtained a license or authorization for such exports from the Commerce Department, according to the indictment. Chips sent to China as part of the alleged scheme, which began in September 2023, included Nvidia's A100 and H200 graphics processing units and Hewlett Packard Enterprise products, according to the indictment filed on Nov. 13 in U.S. District Court in Tampa, Florida. The chips are highly restricted from exports because of their use in artificial intelligence and supercomputing applications, the indictment notes. The indictment was first reported by CourtWatch, the court document aggregation news site founded by counterrorism researcher Seamus Hughes. The indictment notes that China "is rapidly developing exascale supercomputing capabilities and has announced its intent to be the world leader in AI by 2030." "These capabilities are being used by the PRC [People's Republic of China] for its military modernization efforts and in connection with the PRC's weapons design and testing, including for weapons or mass destruction," the indictment says. Raymond owned a technology products distributor company in Huntsville, which was "licensed to sell Nvidia GPUs [graphics processing units], among other products," the indictment says. Raymond's LinkedIn page says his company, Bitworks, is or was a "Nvidia Cloud Partner delivering H100, H200, and coming Blackwell / NVL72 clusters for customers." Raymond and another co-defendant in the case, Mathew Ho, would "cause freight forwarded to chip Nvidia GPUs to third countries, knowing that the GPUs were ultimately destined for and would be transhipped to the" People's Republic of China, the indictment alleges. Ho, a 34-year-old who was born in Hong Kong, is a U.S. citizen who lives in Florida. He is also known as Hon Ning Ho. Ho was the registered agent of a company in Tampa called Janford Realtor, which, despite its name, was never involved in any real estate transactions, but instead "served as an intermediary for several unlawful and unlicensed exports to" China of the advanced and highly-controlled chips, the indictment says. As part of the alleged conspiracy, Ho and Raymond would submit documents related to the shipments that contained false information about the ultimate cosignors for the chips, the value of the chips and the licenses required for their export, the indictment says. Raymond did not respond to requests for comment. His wife declined to comment. Raymond's lawyer, Tae Lee, declined to comment on the charges. Lee also declined to say where Raymond is currently and whether he has been arrested. On Nov. 10, three days before the indictment was filed in Tampa, Raymond was identified in a press release issued by Corvex, an Arlington, Virginia-based AI cloud company, as its chief technology officer. The press release said Corvex and Movano Health, a publicly traded company that sells medical wearables, had agreed to a merger that would enable Corvex to become publicly traded. A Corvex spokesperson, in a statement to CNBC after being asked about Raymond, said, "Corvex had no part in the activities cited in the Department of Justice's indictment." "The person in question is not an employee of Corvex. Previously a consultant to the company, he was transitioning into an employee role but that offer has been rescinded," the spokesperson said In addition to the top count of conspiracy, Raymond is charged with two counts of violations of the Export Control Reform Act in connection with an attempt to export 50 Nvidia H200 GPUs to China through Thailand earlier this year, and the attempted export of about 10 HP supercomputers containing Nvidia H100 GPUs to China through Thailand earlier this year. He is also charged with one count of smuggling goods from the United States related to the attempted export of the 50 Nvidia H200 chips. Raymond is also charged with seven counts of money laundering related to wire transfers totaling more than $3.4 million from a bank account for a company in China to a bank account belonging to Raymond's company in Huntsville, and to Janford Realtor. Ho and the two other defendants in the case, Jing Chen and Cham Li, were all arrested in recent days, according to court documents. Those three men, as part of the alleged conspiracy, would identify customers in China who wanted to buy the Nvidia chips, the indictment says. Ho and Chen, a 45-year-old also known as Harry Chen, were arrested in Tampa. They are being held without bail. In addition to the conspiracy count, Ho is charged with nine money laundering counts in connection with $4 million in wire transfers from the bank account for the Chinese company to Janford Realtor and to Raymond's company. He is also charged with four counts of violating the Export Control Reform Act, and three counts of smuggling. Ho's lawyer, Samuel Williams, declined to comment on the case. Chen is a Chinese national who entered the U.S. on a student visa and who resides in Tampa. He is charged with conspiracy, one count of violating the ECRA, and one count of smuggling. Information about Chen's lawyer was not publicly available. Li, also known as Tony Li, was arrested in California and was due to appear in Oakland federal court on Thursday. Information about Li's lawyer was not available. A Chinese national who lives in California, Li was identified as a manager of Janford Realtor, according to the indictment. He is charged with a single count each of conspiracy, violating the ECRA and smuggling. -- CNBC's Samantha Subin contributed to this story.

Four accused in black-market scheme to smuggle hundreds of Nvidia GPUs to China -- while raking in millions | Fortune

Federal authorities arrested four men for shipping contraband Nvidia chips, which are critical components for artificial intelligence companies. The men allegedly created an elaborate smuggling network that saw the chips shipped from Alabama through Malaysia and Thailand, and eventually to recipients in China, the Department of Justice announced on Thursday. The accused men failed to obtain such permission as they allegedly sought to evade export controls that restrict the shipment of Nvidia graphics processing units (GPUs). According to an indictment, the military in the People's Republic of China (PRC) sought the chips for "weapons design and testing, including for weapons of mass destruction as well as in connection with the PRC's development and deployment of advanced AI surveillance tools." It added that China is developing supercomputing capabilities and intends to become "the world leader in AI by 2030." The export controls, imposed by the Department of Commerce's Bureau of Industry and Security on advanced computing chips and on computers and devices that contain the chips, have been in place since October 2022. "As demonstrated by this indictment, the U.S. Attorney's Office for the Middle District of Florida is firmly committed to safeguarding our country's national security," said U.S. Attorney Gregory W. Kehoe for the Middle District of Florida in a statement. "Thanks to the dedicated investigative work by our law enforcement partners, these defendants who wrongfully exported this sensitive technology are facing justice." The arrests, which took place Wednesday in Florida, Alabama, and California, included Hon Ning Ho, also known as Matthew Ho, 34, a U.S. citizen born in Hong Kong and living in Tampa, Fla.; Brian Curtis Raymond, 46, a U.S. citizen from Huntsville, Ala.; Cham Li, 38, also known as Tony Li, from China and now living in San Leandro, Calif.; and Jing Chen, 45, a Chinese national on an F-1 nonimmigrant student visa living in Tampa, Fla. Chen and Ho appeared in court in Florida yesterday, Raymond appeared in court in Alabama, and Li appeared in court in California on Thursday. The indictment describes Raymond as the CEO and sole owner of an unnamed distributor of U.S. technology products licensed to sell Nvidia GPUs. According to his LinkedIn bio, Raymond operates a company called Bitworks, which claims to deliver "AI at scale with Nvidia HGX and DGX as a certified cloud partner." On LinkedIn, Raymond also identifies himself as the chief technology officer of Corvex, an Arlington, Va.-based AI cloud company, a role he listed as starting in October. Corvex announced last week it would merge with med-tech firm Movano, and go public once the transaction completes. A Corvex spokesman told Fortune: "Corvex had no part in the activities cited in the Department of Justice's indictment. The person in question is not an employee of Corvex. Previously a consultant to the company, he was transitioning into an employee role but that offer has been rescinded." Raymond did not respond to requests for comment. A message left for Ho was unreturned. Attempts to reach Li and Chen were unsuccessful. According to the indictment, the scheme centered around a front company, Janford Realtor LLC, that operated in Tampa and was owned and controlled by Ho and Li. Through the front company, Ho, Chen, and Li identified potential customers in China who wanted to buy Nvidia GPUs and then made orders through Janford and another unnamed U.S. company. Ho and other unnamed co-conspirators bought the GPUs from unnamed vendors, including from Raymond and another unnamed U.S. company, the indictment states. The ring was allegedly successful in smuggling two separate exports, including 400 Nvidia A100 GPUs shipped to China between October 2024 and January 2025 in two shipments. The third and fourth shipments were disrupted by law enforcement, but allegedly included 10 Hewlett Packard Enterprise supercomputers stuffed with Nvidia H100 GPUs and another 50 Nvidia H200 GPUs. Authorities said Janford was never involved in any real estate transactions. Raymond allegedly supplied the GPUs through his Alabama-based electronics company, the indictment states. Messages to Bitworks, the company Raymond lists on his LinkedIn were not returned. Nvidia did not respond to a request for comment. Each of the four is facing a maximum sentence of 20 years on the exports evasion, 10 years on the smuggling charges, and 20 years on each count of money laundering. The arrests come as Nvidia has faced deteriorating business in China due to export rules. Nvidia chief financial officer Colette Kress reported on Wednesday that Nvidia has seen purchase orders dry up due to geopolitical issues, but also advocated for access to the Chinese market. "While we were disappointed in the current state that prevents us from shipping more competitive data center compute products to China, we are committed to continued engagement with the U.S. and China governments and will continue to advocate for America's ability to compete around the world," Kress said on Wednesday during Nvidia's third quarter earnings call.

Justice Department charges 4 men in U.S. in scheme to export AI chips to China

Two Chinese nationals and two Americans have been arrested for allegedly illegally exporting cutting-edge Nvidia chips with artificial intelligence applications to China, the Justice Department said Thursday. The two Chinese nationals are Cham Li, 38, residing in California, and Jing Chen, 45, who is on an F-1 nonimmigrant student visa and resides in Tampa, Florida, the department said. The two Americans are Hon Ning Ho, 34, who resides in Florida, and Brian Curtis Raymond, 46, who resides in Alabama. The four men are charged with conspiring to violate the Export Control Reform Act and money laundering. It wasn't immediately clear if they had lawyers who could speak on their behalf. Justice Department officials allege that the four conspired to illegally export advanced Nvidia graphics processing units, or GPUs, to China through Malaysia and Thailand. The defendants engaged in a "deliberate and deceptive effort to transship controlled Nvidia GPUs to China by falsifying paperwork, creating fake contracts, and misleading U.S. authorities," Assistant Attorney General John Eisenberg said in a statement. They allegedly received nearly $4 million from China to help finance the export scheme, the department said. Some 400 Nvidia A100 GPUs were exported to China between October 2024 and January 2025 in two shipments, the department said, and two other shipments were "disrupted by law enforcement and therefore not completed." The Justice Department said that despite knowing licenses were required to export the items to China, none of the defendants sought or obtained a license for any of the exports. The Justice Department said China is seeking cutting-edge U.S. technology to further its goal of becoming the world leader in AI by 2030. Violations of the Export Control Reform Act and money laundering are each punishable by up to 20 years in prison, if there's a conviction.

Alleged AI Chip Smuggling to China Leads to US Calls for Chip Tracking

(Reuters) -The U.S. Justice Department has charged four people in a scheme to illegally export Nvidia AI chips to China, prompting a key House Republican to call for urgent passage of a chip-tracking bill on Thursday. "China recognizes the superiority of American AI innovation and will do whatever it must to catch up," said John Moolenaar, the chair of the U.S. House Select Committee on China. "That's why the bipartisan Chip Security Act is urgently needed." The legislation, which Moolenaar introduced in May and has 30 cosponsors, would require location verification for chips, make it mandatory for chipmakers to report and share information about potential diversion, and look at additional ways to stop U.S. chips from ending up in the wrong hands. The case highlights the challenges Washington faces in enforcing its sweeping restrictions on high-tech exports to China, which are designed to hobble Beijing's military development and keep the U.S. ahead on technology. China has criticized U.S. export curbs as part of a campaign to weaponize economic and trade issues. The indictment, which the U.S. Department of Justice announced on Thursday, charges two U.S. citizens and two Chinese nationals with conspiring to export Nvidia GPUs to China without required licenses. The defendants allegedly created fake contracts and provided false documentation to ship the chips to third countries, knowing they were destined for China. They then exported 400 Nvidia A100 GPUs to China through Malaysia between October 2024 and January 2025, according to the indictment. Law enforcement stopped attempts to export 10 Hewlett-Packard supercomputers with Nvidia H100 GPUs and 50 separate Nvidia H200 GPUs through Thailand, the U.S. Department of Justice said. In the Florida case, the conspiracy included the use of a Tampa company as a front to purchase and export chips, and nearly $4 million in wire transfers from China to fund the scheme, the Justice Department said. A lawyer for one defendant declined to comment and a lawyer for a second defendant did not immediately respond to a request for comment. The other defendants could not immediately be reached. (Reporting by Karen Freifeld; additional reporting by David Shepardson in Washington and Jonathan Stempel in New York; Editing by Lisa Shumaker)